Interim Results - Part 2

KINGFISHER PLC

2013/14 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

 

		Half year ended 3 August 2013				Half year ended 28 July 2012 (restated - note 3)
		Before	Exceptional			Before	Exceptional
		exceptional	items			exceptional	items
£ millions	Notes	items	(note 5)	Total		items	(note 5)	Total
Sales	4	5,716	-	5,716		5,478	-	5,478
Cost of sales		(3,619)	-	(3,619)		(3,453)	-	(3,453)
Gross profit		2,097	-	2,097		2,025	-	2,025
Selling and distribution expenses		(1,468)	7	(1,461)		(1,407)	4	(1,403)
Administrative expenses		(283)	-	(283)		(272)	(11)	(283)
Other income		17	1	18		19	1	20
Share of post-tax results of joint ventures and associates		5	-	5		7	-	7
Operating profit		368	8	376		372	(6)	366
Analysed as:
Retail profit	4	394	8	402		401	(6)	395
Central costs		(20)	-	(20)		(22)	-	(22)
Share of interest and tax of joint ventures and associates		(6)	-	(6)		(7)	-	(7)
Finance costs		(6)	-	(6)		(9)	-	(9)
Finance income		4	27	31		7	-	7
Net finance income/(costs)	6	(2)	27	25		(2)	-	(2)
Profit before taxation		366	35	401		370	(6)	364
Income tax credit/(expense)	7	(79)	118	39		(106)	1	(105)
Profit for the period		287	153	440		264	(5)	259
Attributable to:
Equity shareholders of the Company				440				259
				440				259
Earnings per share	8
Basic				18.7p				11.1p
Diluted				18.5p				10.9p
Adjusted basic				11.3p				11.5p
Adjusted diluted				11.2p				11.2p

 

The proposed interim dividend for the period ended 3 August 2013 is 3.12p per share.

KINGFISHER PLC

2013/14 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

 

		Year ended 2 February 2013 (restated - note 3)
		Before	Exceptional
		exceptional	items
£ millions	Notes	items	(note 5)	Total
Sales	4	10,573	-	10,573
Cost of sales		(6,618)	-	(6,618)
Gross profit		3,955	-	3,955
Selling and distribution expenses		(2,768)	(17)	(2,785)
Administrative expenses		(525)	(9)	(534)
Other income		36	-	36
Share of post-tax results of joint ventures and associates		20	-	20
Operating profit		718	(26)	692
Analysed as:
Retail profit	4	778	(26)	752
Central costs		(42)	-	(42)
Share of interest and tax of joint ventures and associates		(18)	-	(18)
			-
Finance costs		(16)	-	(16)
Finance income		15	-	15
Net finance costs	6	(1)	-	(1)
Profit before taxation		717	(26)	691
Income tax expense	7	(128)	1	(127)
Profit for the year		589	(25)	564
Attributable to:
Equity shareholders of the Company				564
				564
Earnings per share	8
Basic				24.1p
Diluted				23.8p
Adjusted basic				22.3p
Adjusted diluted				22.0p

KINGFISHER PLC

2013/14 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

£ millions	Half year ended 3 August 2013	Half year ended 28 July 2012	Year ended 2 February 2013
Profit for the period	440	259	564
Actuarial losses on post employment benefits	(17)	(66)	(29)
Tax on items that will not be reclassified	3	19	(18)
Total items that will not be reclassified subsequently to profit or loss	(14)	(47)	(47)
Currency translation differences
Group	(22)	(144)	122
Joint ventures and associates	(1)	(12)	8
Cash flow hedges
Fair value gains/(losses)	13	10	(14)
Gains transferred to inventories	(1)	(8)	(8)
Tax on items that may be reclassified	(2)	2	4
Total items that may be reclassified subsequently to profit or loss	(13)	(152)	112
Other comprehensive income for the period	(27)	(199)	65
Total comprehensive income for the period	413	60	629
Attributable to:
Equity shareholders of the Company	412	61	629
Non-controlling interests	1	(1)	-
	413	60	629

KINGFISHER PLC

2013/14 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

	Attributable to equity shareholders of the Company
£ millions	Share capital	Share premium	Own shares held	Retained earnings	Other reserves (note 13)	Total	Non-controlling interests	Total equity
At 3 February 2013	373	2,204	(60)	3,106	525	6,148	8	6,156
Profit for the period	-	-	-	440	-	440	-	440
Other comprehensive income for the period	-	-	-	(14)	(14)	(28)	1	(27)
Total comprehensive income for the period	-	-	-	426	(14)	412	1	413
Share-based compensation	-	-	-	7	-	7	-	7
New shares issued under share schemes	-	1	-	-	-	1	-	1
Own shares issued under share schemes	-	-	44	(38)	-	6	-	6
Dividends	-	-	-	(150)	-	(150)	-	(150)
At 3 August 2013	373	2,205	(16)	3,351	511	6,424	9	6,433
At 29 January 2012	372	2,199	(134)	2,869	413	5,719	8	5,727
Profit for the period	-	-	-	259	-	259	-	259
Other comprehensive income for the period	-	-	-	(47)	(151)	(198)	(1)	(199)
Total comprehensive income for the period	-	-	-	212	(151)	61	(1)	60
Share-based compensation	-	-	-	11	-	11	-	11
New shares issued under share schemes	-	1	-	-	-	1	-	1
Own shares issued under share schemes	-	-	61	(57)	-	4	-	4
Dividends	-	-	-	(148)	-	(148)	-	(148)
At 28 July 2012	372	2,200	(73)	2,887	262	5,648	7	5,655
At 29 January 2012	372	2,199	(134)	2,869	413	5,719	8	5,727
Profit for the year	-	-	-	564	-	564	-	564
Other comprehensive income for the year	-	-	-	(47)	112	65	-	65
Total comprehensive income for the year	-	-	-	517	112	629	-	629
Share-based compensation	-	-	-	9	-	9	-	9
New shares issued under share schemes	1	5	-	-	-	6	-	6
Own shares issued under share schemes	-	-	74	(68)	-	6	-	6
Dividends	-	-	-	(221)	-	(221)	-	(221)
At 2 February 2013	373	2,204	(60)	3,106	525	6,148	8	6,156

KINGFISHER PLC

2013/14 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED BALANCE SHEET

£ millions	Notes	At 3 August 2013	At 28 July 2012	At 2 February 2013
Non-current assets
Goodwill		2,414	2,396	2,399
Other intangible assets		200	148	166
Property, plant and equipment		3,770	3,573	3,748
Investment property		63	52	66
Investments in joint ventures and associates		282	256	289
Post employment benefits	11	70	-	71
Deferred tax assets		16	20	17
Derivative assets	12	55	57	55
Other receivables		18	18	18
		6,888	6,520	6,829
Current assets
Inventories		2,167	1,932	2,083
Trade and other receivables		599	567	545
Derivative assets	12	12	33	33
Current tax assets		4	2	9
Cash and cash equivalents		559	613	398
		3,341	3,147	3,068
Total assets		10,229	9,667	9,897
Current liabilities
Trade and other payables		(2,695)	(2,558)	(2,430)
Borrowings	12	(15)	(315)	(99)
Derivative liabilities	12	(6)	(5)	(17)
Current tax liabilities		(208)	(314)	(289)
Provisions		(13)	(45)	(35)
		(2,937)	(3,237)	(2,870)
Non-current liabilities
Other payables		(87)	(107)	(115)
Borrowings	12	(329)	(334)	(332)
Derivative liabilities	12	(13)	(2)	(12)
Deferred tax liabilities		(304)	(252)	(303)
Provisions		(50)	(36)	(38)
Post employment benefits	11	(76)	(44)	(71)
		(859)	(775)	(871)
Total liabilities		(3,796)	(4,012)	(3,741)
Net assets		6,433	5,655	6,156
Equity
Share capital		373	372	373
Share premium		2,205	2,200	2,204
Own shares held		(16)	(73)	(60)
Retained earnings		3,351	2,887	3,106
Other reserves	13	511	262	525
Total attributable to equity shareholders of the Company		6,424	5,648	6,148
Non-controlling interests		9	7	8
Total equity		6,433	5,655	6,156

 

The interim financial report was approved by the Board of Directors on 10 September 2013 and signed on its behalf by:

 

 

 

Ian Cheshire, Group Chief Executive

Karen Witts, Group Finance Director

KINGFISHER PLC

2013/14 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED CASH FLOW STATEMENT

 

£ millions	Notes	Half year ended 3 August 2013	Half year ended 28 July 2012	Year ended 2 February 2013
Operating activities
Cash generated by operations	14	600	535	730
Income tax paid		(39)	(74)	(129)
Net cash flows from operating activities		561	461	601
Investing activities
Purchase of businesses, net of cash acquired	16	(28)	-	-
Purchase of property, plant and equipment, investment property and intangible assets		(147)	(172)	(316)
Disposal of property, plant and equipment, investment property and intangible assets		10	6	17
Interest received		3	7	18
Dividends received from joint ventures and associates		11	10	10
Net cash flows from investing activities		(151)	(149)	(271)
Financing activities
Interest paid		(6)	(9)	(18)
Interest element of finance lease rental payments		(2)	(2)	(4)
Repayment of loans		(89)	(5)	(31)
Repayment of Medium Term Notes and other fixed term debt		(33)	-	(162)
Receipt on financing derivatives		6	-	-
Capital element of finance lease rental payments		(6)	(6)	(12)
New shares issued under share schemes		1	1	6
Own shares issued under share schemes		6	4	6
Dividends paid to equity shareholders of the Company		(150)	(148)	(221)
Net cash flows from financing activities		(273)	(165)	(436)
Net increase/(decrease) in cash and cash equivalents and bank overdrafts		137	147	(106)
Cash and cash equivalents and bank overdrafts at beginning of period		398	485	485
Exchange differences		23	(51)	19
Cash and cash equivalents and bank overdrafts at end of period	15	558	581	398

KINGFISHER PLC

2013/14 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.         General information

Kingfisher plc ('the Company'), its subsidiaries, joint ventures and associates (together 'the Group') supply home improvement products and services through a network of retail stores and other channels, located mainly in the United Kingdom, continental Europe and China.

 

Kingfisher plc is a company incorporated in the United Kingdom.

 

The address of its registered office is 3 Sheldon Square, Paddington, London W2 6PX.

 

The Company is listed on the London Stock Exchange.

 

The interim financial report does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Audited statutory accounts for the year ended 2 February 2013 were approved by the Board of Directors on 25 March 2013 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under sections 498(2) or (3) of the Companies Act 2006.

 

The interim financial report has been reviewed, not audited, and was approved by the Board of Directors on 10 September 2013.

 

2.         Basis of preparation

 

The interim financial report for the 26 weeks ended 3 August 2013 ('the half year') has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim Financial Reporting', as adopted by the European Union. It should be read in conjunction with the annual financial statements for the year ended 2 February 2013, which have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. The consolidated income statement and related notes represent results for continuing operations, there being no discontinued operations in the periods presented. Where comparatives are given, '2012/13' refers to the prior half year.

 

There have been no changes in estimates of amounts reported in prior periods that have had a material effect in the current period.

 

The Directors of Kingfisher plc, having made appropriate enquiries, consider that adequate resources exist for the Group to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the condensed consolidated financial statements for the half year ended 3 August 2013.

 

Principal rates of exchange against Sterling

 

	Half year ended 3 August 2013		Half year ended 28 July 2012		Year ended 2 February 2013
	Average rate	Period end rate	Average rate	Period end rate	Average rate	Year end rate
Euro	1.17	1.15	1.23	1.27	1.23	1.15
US Dollar	1.53	1.53	1.58	1.57	1.59	1.57
Polish Zloty	4.91	4.86	5.16	5.24	5.13	4.79
Chinese Renminbi	9.44	9.37	9.99	10.02	10.01	9.80

 

Use of non-GAAP measures

 

In the reporting of financial information, the Group uses certain measures that are not required under IFRS, the generally accepted accounting principles (GAAP) under which the Group reports.  Kingfisher believes that retail profit, adjusted pre-tax profit, effective tax rate, adjusted post-tax profit and adjusted earnings per share provide additional useful information on underlying trends to shareholders. These and other non-GAAP measures such as net debt/cash are used by Kingfisher for internal performance analysis and incentive compensation arrangements for employees. The terms 'retail profit', 'exceptional items', 'adjusted', 'effective tax rate' and 'net debt/cash' are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measures.

 

Retail profit is defined as continuing operating profit before central costs (principally the costs of the Group's head office), exceptional items, amortisation of acquisition intangibles and the Group's share of interest and tax of joint ventures and associates.

The separate reporting of non-recurring exceptional items, which are presented as exceptional within their relevant income statement category, helps provide an indication of the Group's underlying business performance. The principal items which are included as exceptional items are:

·      non-trading items included in operating profit such as profits and losses on the disposal, closure or impairment of subsidiaries, joint ventures, associates and investments which do not form part of the Group's trading activities;

·      profits and losses on the disposal of properties; and

·      the costs of significant restructuring and incremental acquisition integration costs.

 

The term 'adjusted' refers to the relevant measure being reported for continuing operations excluding exceptional items, financing fair value remeasurements, amortisation of acquisition intangibles, related tax items and prior year tax items. Financing fair value remeasurements represent changes in the fair value of financing derivatives, excluding interest accruals, offset by fair value adjustments to the carrying amount of borrowings and other hedged items under fair value hedge relationships. Financing derivatives are those that relate to underlying items of a financing nature.

 

The effective tax rate represents the effective income tax expense as a percentage of continuing profit before taxation excluding exceptional items. Effective income tax expense is the continuing income tax expense excluding tax on exceptional items and tax adjustments in respect of prior years and the impact of changes in tax rates on deferred tax.

 

Net debt (or net cash) comprises borrowings and financing derivatives (excluding accrued interest), less cash and cash equivalents and current other investments.

 

3.         Accounting policies

 

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 2 February 2013, as described in note 2 of those financial statements, except where set out below.

 

IAS 19 (revised), 'Employee benefits', amends the accounting for employment benefits and the Group has applied it retrospectively in accordance with the transition provisions of the standard. The impact on the Group has been in the following areas:

·      The standard replaces the interest cost on the defined benefit obligation and the expected return on plan assets with a single net interest cost or return based on the net defined benefit asset or liability and the discount rate, measured at the beginning of the year. There is no change to determining the discount rate; this continues to reflect the yield on high-quality corporate bonds. For the current and comparative period, the Group's reported profit before taxation was not impacted as the expected rate of return on assets at the start of the current and prior year was the same as the discount rate for the UK scheme, the Group's principal defined benefit pension plan.

·      The revised standard also requires administrative costs of running the UK scheme to be reclassified from net finance costs to operating costs. For the current period the Group's reported operating profit is £2m lower and net finance income £2m higher than they would have been prior to the adoption of IAS 19 (revised 2011). For the comparative period the Group's reported operating profit is £2m lower and net finance costs £2m lower than previously reported. For the year ended 2 February 2013 the Group's reported operating profit is £3m lower and net finance costs £3m lower than previously reported.

 

The amendments to IAS 1, 'Presentation of items of other comprehensive income', require items presented in 'other comprehensive income' to be grouped by those items that may be reclassified subsequently to profit or loss and those that will never be reclassified, together with their associated income tax. The amendments have been applied retrospectively and the presentation of items of comprehensive income has been adjusted accordingly.

 

IFRS 13, 'Fair value measurement', has impacted the measurement of fair value for certain financial assets and liabilities as well as introducing new disclosures.

 

Taxes on income for interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

 

There are no other standards, amendments to standards or interpretations that are both mandatory for the first time for the financial year ending 1 February 2014 and expected to have a material impact on the Group's results.

4.         Segmental analysis

 

Income statement

	Half year ended 3 August 2013
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Sales	2,270	2,306	557	583	5,716
Retail profit	141	191	54	8	394
Exceptional items					8
Central costs					(20)
Share of interest and tax of joint ventures and associates					(6)
Operating profit					376
Net finance income					25
Profit before taxation					401

 

	Half year ended 28 July 2012 (restated)
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Sales	2,264	2,206	513	495	5,478
Retail profit	143	191	54	13	401
Exceptional items					(6)
Central costs					(22)
Share of interest and tax of joint ventures and associates					(7)
Operating profit					366
Net finance costs					(2)
Profit before taxation					364

 

	Year ended 2 February 2013 (restated)
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Sales	4,316	4,194	1,029	1,034	10,573
Retail profit	231	397	107	43	778
Exceptional items					(26)
Central costs					(42)
Share of interest and tax of joint ventures and associates					(18)
Operating profit					692
Net finance costs					(1)
Profit before taxation					691

Balance sheet

	At 3 August 2013
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Segment assets	1,456	1,366	560	612	3,994
Central liabilities					(234)
Goodwill					2,414
Net cash					259
Net assets					6,433

 

	At 28 July 2012
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Segment assets	1,350	1,237	480	564	3,631
Central liabilities					(401)
Goodwill					2,396
Net cash					29
Net assets					5,655

 

	At 2 February 2013
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Segment assets	1,458	1,443	600	620	4,121
Central liabilities					(402)
Goodwill					2,399
Net cash					38
Net assets					6,156

 

The 'Other International' segment consists of Poland, China, Spain, Russia, Romania, the joint venture Koçtaş in Turkey and the associate Hornbach which has operations in Germany and other European countries. Poland has been shown separately due to its significance.

 

Central costs principally comprise the costs of the Group's head office. Central liabilities comprise unallocated head office and other central items including pensions, interest and tax.

 

The Group's sales, although generally not highly seasonal on a half-yearly basis, do increase over the Easter period and during the summer months leading to slightly higher sales usually being recognised in the first half of the year.

5.         Exceptional items

 

	Half year ended	Half year ended	Year ended
£ millions	3 August 2013	28 July 2012	2 February 2013
Included within selling and distribution expenses
Ireland restructuring	7	-	(21)
UK restructuring	-	4	4
	7	4	(17)
Included within administrative expenses
UK restructuring	-	(22)	(20)
Net pension gain	-	11	11
	-	(11)	(9)
Included within other income
Profit on disposal of properties	1	1	-
	1	1	-
Included within finance income
Kesa demerger French tax case - repayment supplement income	27	-	-
	27	-	-
Exceptional items before tax	35	(6)	(26)
Tax on exceptional items	-	1	1
Kesa demerger French tax case	118	-	-
Exceptional items	153	(5)	(25)

 

The exceptional credit of £7m for Ireland restructuring reflects the release of provisions recorded in January 2013 when B&Q Ireland entered into an Examinership process. It successfully exited Examinership in May 2013 with the closure of only one store.

 

In July 2013 the Conseil d'Etat, France's ultimate court, found in favour of Kingfisher regarding the Kesa demerger tax case, which concluded the matter. Whilst a refund was received from the French tax authorities following the first positive decision in 2009, the Group continued to provide against the risk while litigation was on-going. A £27m repayment supplement provision and £118m taxation provision related to the case have subsequently been released and treated as exceptional.

 

The prior year UK restructuring net charge principally reflected the streamlining of B&Q UK & Ireland's store support office and kitchen, bathroom and bedroom business as well as IT services. It included a £4m release of an onerous property contract provision for idle stores either sublet or exited in the period, which had previously been charged as an exceptional item.

 

In the prior year the UK final salary pension scheme was closed to future benefit accrual, resulting in a net pension gain of £11m.  This consisted of a £27m curtailment gain offset by a charge of £16m for transitional payments to scheme members.

 

6.         Net finance income/(costs)

 

	Half year ended		Half year ended	Year ended
£ millions	3 August 2013		28 July 2012 (restated)	2 February 2013 (restated)
Bank overdrafts and bank loans		(3)	(3)	(8)
Medium Term Notes and other fixed term debt		(2)	(4)	(7)
Finance leases		(2)	(2)	(4)
Financing fair value remeasurements		1	(1)	2
Capitalised interest		-	1	1
Finance costs		(6)	(9)	(16)
Cash and cash equivalents		3	7	15
Net interest return on defined benefit pension schemes		1	-	-
Kesa demerger French tax case - repayment supplement income (note 5)		27	-	-
Finance income		31	7	15
Net finance income/(costs)		25	(2)	(1)

7.         Income tax

 

	Half year ended	Half year ended	Year ended
£ millions	3 August 2013	28 July 2012	2 February 2013
UK corporation tax
Current tax on profits for the period	30	30	47
Adjustments in respect of prior years	(1)	3	(13)
	29	33	34
Overseas tax
Current tax on profits for the period	66	65	128
Kesa demerger French tax case (note 5)	(118)	-	-
Other adjustments in respect of prior years	(12)	(1)	(54)
	(64)	64	74
Deferred tax
Current period	3	8	18
Adjustments in respect of prior years	-	3	5
Adjustments in respect of changes in tax rates	(7)	(3)	(4)
	(4)	8	19
Income tax (credit)/expense	(39)	105	127

 

The effective rate of tax on profit before exceptional items and excluding prior year tax adjustments and the impact of changes in tax rates on deferred tax is 27% (2012/13: 28%), representing the best estimate of the effective rate for the full financial year. The effective tax rate for the year ended 2 February 2013 was 27%. Exceptional tax items for the current period amount to a credit of £118m (2012/13: £1m credit). Tax on exceptional items for the year ended 2 February 2013 was a credit of £1m.

 

8.         Earnings per share

 

	Half year ended	Half year ended	Year ended
Pence	3 August 2013	28 July 2012	2 February 2013
Basic earnings per share	18.7	11.1	24.1
Effect of dilutive share options	(0.2)	(0.2)	(0.3)
Diluted earnings per share	18.5	10.9	23.8
Basic earnings per share	18.7	11.1	24.1
Exceptional items before tax	(1.5)	0.3	1.1
Tax on exceptional and prior year items	(5.9)	0.1	(2.8)
Financing fair value remeasurements	-	-	(0.1)
Adjusted basic earnings per share	11.3	11.5	22.3
Diluted earnings per share	18.5	10.9	23.8
Exceptional items before tax	(1.5)	0.2	1.1
Tax on exceptional and prior year items	(5.8)	0.1	(2.8)
Financing fair value remeasurements	-	-	(0.1)
Adjusted diluted earnings per share	11.2	11.2	22.0

 

The calculation of basic and diluted earnings per share is based on the profit for the period attributable to equity shareholders of the Company. A reconciliation of statutory earnings to adjusted earnings is set out below:

 

	Half year ended	Half year ended	Year ended
£ millions	3 August 2013	28 July 2012	2 February 2013
Earnings	440	259	564
Exceptional items before tax	(35)	6	26
Tax on exceptional and prior year items	(138)	1	(67)
Financing fair value remeasurements	(1)	1	(2)
Tax on financing fair value remeasurements	-	-	1
Adjusted earnings	266	267	522

 

The weighted average number of shares in issue during the period, excluding those held in the Employee Share Ownership Plan Trust (ESOP), is 2,358m (2012/13: 2,332m). The diluted weighted average number of shares in issue during the period is 2,376m (2012/13: 2,379m). For the year ended 2 February 2013, the weighted average number of shares in issue was 2,339m and the diluted weighted average number of shares in issue was 2,373m.

9.         Dividends

 

	Half year ended	Half year ended	Year ended
£ millions	3 August 2013	28 July 2012	2 February 2013
Dividends to equity shareholders of the Company
Final dividend for the year ended 2 February 2013 of 6.37p per share	150	-	-
Interim dividend for the year ended 2 February 2013 of 3.09p per share	-	-	73
Final dividend for the year ended 28 January 2012 of 6.37p per share	-	148	148
	150	148	221

 

The proposed interim dividend for the period ended 3 August 2013 is 3.12p per share.

 

10.        Capital expenditure

 

Additions to the cost of property, plant and equipment, investment property and intangible assets, excluding assets acquired on the purchase of businesses, are £146m (2012/13: £176m) and for the year ended 2 February 2013 were £334m. Disposals in net book value of property, plant and equipment, investment property and intangible assets are £9m (2012/13: £5m) and for the year ended 2 February 2013 were £21m.

 

Capital commitments contracted but not provided for at the end of the period are £48m (2012/13: £34m) and at 2 February 2013 were £36m.

 

11.        Post employment benefits

 

	Half year ended	Half year ended	Year ended
£ millions	3 August 2013	28 July 2012 (restated)	2 February 2013 (restated)
Net deficit in schemes at beginning of period	-	(15)	(15)
Current service cost	(4)	(14)	(17)
Administration costs	(2)	(2)	(3)
Curtailment gain	-	27	27
Net interest return	1	-	-
Actuarial losses	(17)	(66)	(29)
Contributions paid by employer	16	23	41
Exchange differences	-	3	(4)
Net deficit in schemes at end of period	(6)	(44)	-

 

The assumptions used in calculating the costs and obligations of the Group's defined benefit pension schemes are set by the Directors after consultation with independent professionally qualified actuaries. The assumptions are based on the conditions at the time and changes in these assumptions can lead to significant movements in the estimated obligations, as illustrated in the sensitivity analysis provided in note 27 of the annual financial statements for the year ended 2 February 2013.

 

A key assumption in valuing the pension obligation is the discount rate. Accounting standards require this to be set based on market yields on high quality corporate bonds at the balance sheet date. The UK scheme discount rate is based on the yield on the iBoxx over 15 year AA-rated Sterling corporate bond index adjusted for the difference in term between iBoxx and scheme liabilities.

 

The discount rate and price inflation actuarial valuation assumptions for the UK scheme, being the Group's principal defined benefit scheme, are set out below:

	At	At	At
Annual % rate	3 August 2013	28 July 2012	2 February 2013
Discount rate	4.6	4.0	4.6
Price inflation	3.3	2.6	3.3

 

In the prior year the UK final salary scheme was closed to future benefit accrual with effect from 30 June 2012, resulting in a curtailment gain of £27m. From this date all UK employees have had the opportunity to join an enhanced defined contribution scheme. The reduction in future contributions to the final salary scheme has been offset significantly by the increased employee participation in, and employer contributions to, the enhanced defined contribution scheme.

 

12.        Financial instruments

 

The Group holds the following financial instruments at fair value:

				At
£ millions				3 August 2013
Cross-currency interest rate swaps				60
Foreign exchange contracts				7
Derivative assets				67
Cross-currency interest rate swaps				(13)
Foreign exchange contracts				(6)
Derivative liabilities				(19)

 

The fair values are calculated by discounting future cash flows arising from the instruments and adjusting for credit risk. These fair value measurements are all made using observable market rates of interest, foreign exchange and credit risk.

 

All the financial instruments held by the Group are considered to have fair values determined by Level 2 inputs as defined by the fair value hierarchy of IFRS 13, 'Fair value measurement'. There are no non-recurring fair value measurements nor have there been any transfers of assets or liabilities between levels of the fair value hierarchy.

 

Except as detailed in the following table of borrowings, the directors consider that the carrying amounts of financial instruments recorded at amortised cost in the financial statements are approximately equal to their fair values.

 

Where available, market values have been used to determine the fair values of borrowings. Where market values are not available or are not reliable, fair values have been calculated by discounting cash flows at prevailing interest and foreign exchange rates.

			Carrying amount
	At	At	At
£ millions	3 August 2013	28 July 2012	2 February 2013
Bank overdrafts	1	32	-
Bank loans	16	91	68
Medium Term Notes and other fixed term debt	264	464	298
Finance leases	63	62	65
Borrowings	344	649	431
			Fair value
	At	At	At
£ millions	3 August 2013	28 July 2012	2 February 2013
Bank overdrafts	1	32	-
Bank loans	17	92	69
Medium Term Notes and other fixed term debt	273	472	307
Finance leases	79	85	86
Borrowings	370	681	462

 

13.        Other reserves

 

£ millions	Cash flow hedge reserve	Translation reserve	Other	Total
At 3 February 2013	(8)	374	159	525
Currency translation differences Group	-	(23)	-	(23)
Joint ventures and associates	-	(1)	-	(1)
Cash flow hedges Fair value gains	13	-	-	13
Gains transferred to inventories	(1)	-	-	(1)
Tax on items that may be reclassified	(4)	2	-	(2)
Other comprehensive income for the period	8	(22)	-	(14)
At 3 August 2013	-	352	159	511
At 29 January 2012	7	247	159	413
Currency translation differences Group	-	(143)	-	(143)
Joint ventures and associates	-	(12)	-	(12)
Cash flow hedges Fair value gains	10	-	-	10
Gains transferred to inventories	(8)	-	-	(8)
Tax on items that may be reclassified	(1)	3	-	2
Other comprehensive income for the period	1	(152)	-	(151)
At 28 July 2012	8	95	159	262
At 29 January 2012	7	247	159	413
Currency translation differences Group	-	122	-	122
Joint ventures and associates	-	8	-	8
Cash flow hedges Fair value losses	(14)	-	-	(14)
Gains transferred to inventories	(8)	-	-	(8)
Tax on items that may be reclassified	7	(3)	-	4
Other comprehensive income for the year	(15)	127	-	112
At 2 February 2013	(8)	374	159	525

14.        Cash generated by operations

 

	Half year ended	Half year ended	Year ended
£ millions	3 August 2013	28 July 2012 (restated)	2 February 2013 (restated)
Operating profit	376	366	692
Share of post-tax results of joint ventures and associates	(5)	(7)	(20)
Depreciation and amortisation	130	122	248
Impairment losses	-	-	8
(Profit)/loss on disposal of property, plant and equipment, investment property and intangible assets	(1)	(1)	5
Share-based compensation charge	7	11	9
Increase in inventories	(60)	(152)	(191)
Increase in trade and other receivables	(50)	(57)	(6)
Increase in trade and other payables	234	264	19
Movement in provisions	(21)	23	14
Movement in post employment benefits	(10)	(34)	(48)
Cash generated by operations	600	535	730

 

15.        Net cash

 

	At	At	At
£ millions	3 August 2013	28 July 2012	2 February 2013
Cash and cash equivalents	559	613	398
Bank overdrafts	(1)	(32)	-
Cash and cash equivalents and bank overdrafts	558	581	398
Bank loans	(16)	(91)	(68)
Medium Term Notes and other fixed term debt	(264)	(464)	(298)
Financing derivatives	44	65	71
Finance leases	(63)	(62)	(65)
Net cash	259	29	38

 

	Half year ended	Half year ended	Year ended
£ millions	3 August 2013	28 July 2012	2 February 2013
Net cash/(debt) at beginning of period	38	(88)	(88)
Net increase/(decrease) in cash and cash equivalents and bank overdrafts	137	147	(106)
Repayment of loans	89	5	31
Repayment of Medium Term Notes and other fixed term debt	33	-	162
Receipt on financing derivatives	(6)	-	-
Capital element of finance lease rental payments	6	6	12
Cash flow movement in net cash	259	158	99
Borrowings acquired	(35)	-	-
Exchange differences and other non-cash movements	(3)	(41)	27
Net cash at end of period	259	29	38

 

16.        Acquisitions

 

On 31 May 2013, the Group acquired 100% of the share capital of the Bricostore Romania companies from Group Bresson, a French retail company. Consideration of £51m comprised £35m cash and a further £16m non-cash element, representing the obligation to assume a liability of the vendor.

 

Goodwill of £13m has been recognised on provisional net assets of £38m, representing a strategic premium to strengthen the Group's position in Eastern Europe and anticipated synergies that will arise from the acquisition.

£ millions
Provisional fair value amounts recognised of identifiable assets acquired and liabilities assumed
Property, plant and equipment	60
Other intangible assets	1
Inventories	31
Trade and other receivables	22
Cash and cash equivalents	7
Trade and other payables	(32)
Current tax liabilities	(5)
Borrowings	(35)
Provisions	(11)
Total identifiable net assets acquired	38
Goodwill	13
Total consideration	51

 

The acquisition amounts recorded in the consolidated cash flow statement for the period are:

 

£ millions
Cash consideration	(35)
Cash acquired	7
Purchase of businesses, net of cash acquired	(28)

 

Immediately following the acquisition, Kingfisher settled Bricostore Romania's borrowings of £35m (included within repayment of loans in the cash flow statement).

 

Acquisition related costs of £1m have been charged in the consolidated income statement in the period.

 

Owing to local conditions, Bricostore Romania prepares its financial statements to 31 December. In the period from 31 May 2013 to 30 June 2013, it contributed sales of £11m and a retail profit of £nil. If the acquisition had occurred at the start of the financial year, the Group's sales would have been £5,754m and Group operating profit, after exceptional items, would have been £374m for the six months ended 3 August 2013.

 

17.        Contingent assets and liabilities

 

The Group has arranged for certain guarantees to be provided to third parties in the ordinary course of business. Of these guarantees, only £1m (2012/13: £6m) would crystallise due to possible future events not wholly within the Group's control. At 2 February 2013 the amount was £1m.

 

The Group is subject to claims and litigation arising in the ordinary course of business and provision is made where liabilities are considered likely to arise on the basis of current information and legal advice.

 

18.        Related party transactions

 

The Group's significant related parties are its joint ventures, associates and pension schemes as disclosed in note 36 of the annual financial statements for the year ended 2 February 2013. There have been no significant changes in related parties or related party transactions in the period.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors confirm that this set of interim condensed financial statements has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

 

·      an indication of important events that have occurred during the period and their impact on the interim condensed financial statements, and a description of the principal risks and uncertainties for the remainder of the financial year; and

·      material related party transactions in the period and any material changes in the related party transactions described in the last annual report.

 

The Directors of Kingfisher plc were listed in the Kingfisher plc Annual Report for the year ended 2 February 2013. There have been no changes in the period.

 

By order of the Board

 

 

Ian Cheshire                                                                        Karen Witts

Group Chief Executive                                                        Group Finance Director

10 September 2013                                                            10 September 2013

 

INDEPENDENT REVIEW REPORT TO KINGFISHER PLC

 

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the half year ended 3 August 2013 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 18. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410; "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

 

Directors' responsibilities

 

The interim financial report is the responsibility of, and has been approved by, the Directors.  The Directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34; "Interim Financial Reporting," as adopted by the European Union.

 

Our responsibility

 

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review.

 

Scope of review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410; "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the half year ended 3 August 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

 

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

10 September 2013